Petition — General Atomic Co. v. Felter

|

Court, U. &

IN THE FILEQD

Supreme Court of the United 14 1978

October Term 1976 ee

no.%76-385 —

GENERAL ATOMIC COMPANY, A partnership composed of Gulf

Oil Corporation and Scallop Nuclear, Inc.,

Petitioner,

vs.

THE HONORABLE EDWIN L. FELTER, District Court Judge for

the First Judicial District, Santa Fe County, New Mexico,

Respondent.

GENERAL ATOMIC COMPANY, A partnership composed of Gulf

Oil Corporation and Scallop Nuclear, Inc.,

Petitioner,

vs.

UNITED NUCLEAR CORPORATION,

Respondent.

PETITION FOR WRITS OF CERTIORARI TO THE

SUPREME COURT OF THE STATE OF NEW MEXICO

AND THE DISTRICT COURT OF THE FIRST JUDICIAL

DISTRICT, COUNTY OF SANTA FE, NEW MEXICO

JOHN R. HUPPER,

W. DENNIS Cross,

One Chase Manhattan Plaza,

New York, N. Y. 10005

JouNn D. Ross,

20 First Plaza,

Albuquerque, New Mexico 87103

DANIEL K. MAYERS,

RoBertT B. McCaw,

1666 K Street, N.W.,

Washington, D. C. 20006

Attorneys for Petitioner

Of Counsel:

CRAVATH, SWAINE & Moore,

One Chase Manhattan Plaza,

New York, N. Y. 10005

RopeyY, DICKASON, SLOAN, AKIN & Ross,

20 First Plaza,

Albuquerque, New Mexico 87103

WILMER, CUTLER & PICKERING,

1666 K Street, N.W.

Washington, D. C. 20006

September 14, 1976

Table of Contents

Opinions and Orders Below .................0005:

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1

3

5

Constitutional and Statutory Provisions Involved .. 6

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7

9

Background ce ehabesdedabbusbabavbunvaueeses

The New Mexico State Court Action .........

The New York Federal Court Action ........ 10

Issuance of the Injunction ................... a

Reasons for Granting the Writ ................... 11

1. The Injunction Unconstitutionally Interferes

With The Federally Granted Rights of Peti-

tioner As A Litigant In An Ongoing Federal

BUOCMREEED 6. cb4dxedundenscnstewewkesesea 12

2. The Injunction Unconstitutionally Inhibits

Petitioner’s Access to Federal Courts Gen-

GONE 6h. + 6dennned taWnedeeeehondeveudenen< 15

I i i a i ge es 21

Table of Authorities

CasEs:

Agrashell, Inc. v. Bernard Siroita Co., 344 F.2d

et ee ED ebb hban dedaddenetebnenscuc 15

Bekoff v. Clinton, 344 F. Supp. 642 (S.D.N.Y.

RED itcKkgdKONKwsd es Channa éecedees bade Gide 19

PAGE

Chicago and N.W.R. Co. v. Whitton’s Adm’r, 80

Ci, Be Gee hives cncccscudesesvantesstiaes 19

Chicot County v. Sherwood, 148 U.S. 529 (1893) .. 19

City of Dallas v. Brown, 362 S8.W.2d 372 (1962) .. 17

City of Dallas v. Brown, 368 S.W.2d 240 (1963) .. - 17

City of Dallas v. Brown, 384 S.W.2d 724 (1964)... 18

City of Dallas v. Dixon, 365 S.W.2d 919 (1963) ... 17

Cohen v. Beneficial Loan Corp., 337 U.S. 541 (1949) 5

Csohan v. United Benefit Life Ins. Co., 33 Ohio

App.2d 425, 200 N.E.2d 345 (Ohio Ct. App. 1964) 15

Crawley v. Bauchens, 13 Ul. App.2d 791, 300 N.E.

603 (1973), aff’d, 57 Ill.2d 360, 312 N.E.2d 236

SSE 4055400sakdssebadiesewdbereeesbuneees 19

Donovan v. Dallas, 377 U.S. 408 (1964) ....11, 12, 15, 16,

18, 19, 21

Home Ins. Co. v. Morse, 87 U.S. 445 (1874) ...... 19

Johnson v. Brown-Service Ins. Co., 293 Ala. 552,

ee GE GP ED 6 kde nccadovedéssavsceves 19

Local No, 438 v. Curry, 371 U.S. 542 (1963) ...... 5

Miller v. Miller, 423 F.2d 145 (10th Cir. 1970) .... 19

State ex rel. Harvey v. Medler, 19 N.M. 252, 142

Fs See GED eececdandhbdadkesambadenesensueds 4

Stemler v. Burke, 344 F.2d 393 (6th Cir. 1965) .... 15

Weisfeld v. Spartans Industries, Inc., 58 F.R.D.

See Gs SEED neo cvecnunatcusuucssacens 19

—,

PAGE

Constitutional Provisions, Statutes and Rules

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Other Authorities

3 Moore, Federal Practice J 14.04 (1964) .......... 15

Albuquerque Journal, May 18, 1976 .............. 10

IN THE

Supreme Court of the United States

October Term 1976

No.

re

A

GeneraL Atomic Company, A partnership composed of

Gulf Oil Corporation and Scallop Nuclear, Inc.,

Petitioner,

vs.

Tue HonoraBLte Epwin L. Fexrer, District Court Judge

for the First Judicial District, Sante Fe County, New

Mexico,

Respondent.

GeneraL Atomic Company, A partnership composed of

Gulf Oil Corporation and Scallop Nuclear, Inc.,

Petitioner,

vs.

Unrtep Nvuoiear Corporation,

Respondent.

t*.

“!

PETITION FOR WRITS OF CERTIORARI TO THE

SUPREME COURT OF THE STATE OF NEW MEXICO

AND THE DISTRICT COURT OF THE FIRST JUDICIAL

DISTRICT, COUNTY OF SANTA FE, NEW MEXICO

Opinions and Orders Below

Petitioner General Atomic Company (‘‘GAC’’) seeks

writs of certiorari directed (a) to the District Court of the

First Judicial District, County of Santa Fe, New Mexico

(the ‘‘Santa Fe Court’’), to review its order of injunction

dated April 2, 1976 (the ‘‘Injunction’’), and (b) to the New

Mexico Supreme Court to review its order dated June 16,

1976, in which that Court quashed as improvidently granted

an alternative (temporary) writ of prohibition directed to

the Santa Fe Court, thereby leaving the Injunction in effect.

The Injunction prevents petitioner from exercising

rights granted by the federal Constitution, federal statutes

and the Federal Rules of Civil Procedure:

‘*General Atomie Company, its partners, privies,

agents, servants and employees, are hereby pre-

liminarily enjoined and prohibited from filing or

prosecuting any action or actions against United

Nuclear Corporation in any other forum relating to

any rights, claims or the subject matter of this

action. This injunction prohibiis the institution or

prosecution of ordinary litigation, third party pro-

ceedings, cross-claims, arbitration proceedings or any

other method or manner of instituting or prosecuting

actions, claims or demands relating to the subject

matter of this lawsuit, or including United Nuclear

Corporation as a party thereto.’’

The Injunction thus clearly prevents petitioner from

prosecuting in any forum, including the federal courts, any

claim petitioner may have against United Nuclear Corpora-

tien (‘‘UNC’’) relating to the subject matter of a pending

m personam action brought by UNC against petitioner in

the Santa Fe Court. UNC seeks in that court to avoid con-

tract obligations to deliver over 24,000,000 pounds of urani-

um having a present market value of approximately a

billion dollars. The Injunction extends to an on-going fed-

eral proceeding in which petitioner previcus!v had been

made a party defendant by Indiana & Michigan Electric

Company (‘‘I&M’’) a public utility demanding delivery by

petitioner of a substantial portion of that uranium, and

-—s

prevents petitioner from protecting itself as a defendant

in the federal court through exercise of its rights to seek

impleader or joinder of UNC under Fed. R. Civ. P. 14 or

19(a) in order to force UNC to deliver such uranium to

petitioner.

The Injunction of the Santa Fe Court is annexed hereto

as Appendix A. That court’s reasons for granting the

Injunction were set forth in a letter to the parties dated

March 29, 1976, annexed hereto as Appendix B. On peti-

tioner’s application, the New Mexico Supreme Court issued

an alternative writ of prohibition dated April 14, 1976, an-

nexed hereto as Appendix C. The writ of prohibition had

the effect of bringing the Injunction before the New Mexico

Supreme Court for review of petitioner’s claims that it was

illegally issued, including the constitutional and other fed-

eral claims advanced in this Petition. On June 16, 1976,

after briefing and immediately after oral argument, the

New Mexico Supreme Court issued an order quashing the

alternative writ of prohibition ‘‘as improvidently granted’’,

leaving the Injunction in effect. That order is annexed

hereto as Appendix D. Because no opinion was issued by

the New Mexico Supreme Court, its reasons can best be

ascertained from comments by the Court during oral argu-

ment. Relevant excerpts of a transcript of that argument

are annexed hereto as Appendix E.*

Jurisdiction

The order of the New Mexico Supreme Court was en-

tered on June 16, 1976. This Court has jurisdiction to issue

a writ of certiorari under 28 U.S.C. § 1257(3).

The New Mexico Supreme Court reviewed the Injunc-

tion under a writ of prohibition. Under New Mexico law,

* No official transcript was made. Appendix E was transcribed

from 2 ane recording ats by the Clerk of the Supreme Court.

a writ of prohibition issues ‘‘to prevent . . . [an inferior

court] from exceeding its jurisdiction, either by prohibiting

it from.assuming jurisdiction in a matter over which it has

no control, or from going beyond its legitimate powers in

a matter of which it has jurisdiction’’. State ex rel. Har-

vey v. Medler, 19 N.M. 252, 142 P. 376 (1914). The writ

was issued on April 14, 1976, and prohibited the trial judge

‘‘from taking any action to enforce the .. . [Injunction]

until the further order of this Court’’ and ordered him ‘‘to

show cause ... why you should not be so prohibited and

restrained and further to show cause why this alternative

writ herein issued should not be made permanent.’’* The

order quashing that writ ‘‘as improvidently granted’’ was

a final determination by the New Mexico Supreme Court,

the court of last resort of the State, of the merits of peti-

tioner’s claim that the trial court had gone ‘‘beyond its

legitimate powers’’ in issuing the Injunction.

The New Mexico Supreme Court considered and

rejected petitioner’s constitutional claims in reaching its

decision. Before both the trial court and the New Mexico

Supreme Court, petitioner contended that the federal Con-

stution and statutes barred granting the Injunction, on the

grounds set forth in this Petition. That contention was

explicitly rejected by the trial court (Appendix B).

Although the New Mexico Supreme Court issued no opin-

ion, the briefs and arguments of the parties, as well as the

remarks of counse] and the Court during oral argument

(Appendix E), show that petitioner’s constitutional claims

were vigorously presented to, and considered by, the New

Mexico Supreme Court.

_ _* It should be noted that, while the alternative writ prohibited the

trial judge from taking any action to enforce the Injunction, it did

not stay the Injunction’s effectiveness. Thus, had petitioner taken

= _— —— UNC after ~—~r of the writ, it would have been

subject to retroactive sanctions for violating the Injuncti

rg ng the Injunction once the

5

It thus appears that the order of the New Mexico

Supreme Court quashing the alternative writ ‘‘as improvi-

dently granted’’ was grounded on rejection of the merits of

petitioner’s claim. For that reason petitioner seeks a

writ of certiorari directed to the New Mexico Supreme

Court. If the order was not so grounded, it was the equiva-

lent of a refusal to hear a discretionary appeal. In that

case, the decision of the Santa Fe District Court granting

the Injunction was by ‘‘the highest court of a State in which

a decision could be had’’ within the meaning of 28 U.S.C.

§ 1257. Petitioner therefore also seeks a writ of certiorari

directed to that court.

The Injunction is a ‘‘final judgment or decree’’ within

the meaning of 28 U.S.C. § 1257. The questions presented

by this petition are wholly separate from and independent

of the merits of the state court action in which the Injunc-

tion was issued, and review of a final judgment in that

action would not provide an opportunity for petitioner to

obtain review of the Injunction. See Cohen v. Beneficial

Loan Corp., 337.U.S. 541 (1949). The Injunction would not

be merged in such final judgment. Moreover, the injury

petitioner seeks to avoid will already have been inflicted,

since such judgment would, absent the most extraordinary

circumstances, be determinative of petitioner’s substantive

rights in other litigation which it has been restrained from

pursuing. See Local No. 438 v. Curry, 371 U.S. 542 (1963).

Questions Presented

1. Can a state court in an in personam action constitu-

tionally enjoin a defendant, also a defendant in a pending

federal court action instituted by a different plaintiff, from

impleading or moving to join pursuant to Fed. R. Civ. P. 14

or 19(a) the state court plaintiff as a party in such federal

action? .

2. Can a state court in an in personam action constitu-

tionally enjoin a defendant from instituting an action in

a federal court?

Constitutional and Statutory Provisions Involved

The constitutional and statutory provisions involved are

U.S. Const. Art. III, §1, U.S. Const. Art. VI and 28

U.S.C. § 2072, which provide in relevant part:

U.S. Const. Art. ITI, §1:

‘‘The judicial power of the United States shall

be vested in one supreme court, and in such inferior

courts as the Congress may from time to time ordain

and establish... .’’

U.S. Const. Art. VI:

‘‘This Constitution and the laws of the United

States which shall be made in pursuance thereof;

and all treaties made, or which shall be made, under

the Authority of the United States shall be the

supreme Law of the Land; and the Judges in every

state shall be bound thereby, any thing in the Consti-

tution or laws of any State to the contrary notwith-

standing.’’

28 U.S.C. § 2072:

‘‘The Supreme Court shall have the power to pre-

scribe by general rules the forms of process, writs,

pleadings, and motions and the practice and pro-

cedure of the district courts and courts of appeals

in civil actions... .’’

Also involved are Fed. R. Civ. P. 14(a) and 19(a), which

provide in relevant part:

Fed. R. Civ. P. 14(a):

‘‘When Defendant may Bring in Third Party.

At any time after commencement of the action a de-

fending party, as a third-party plaintiff, may cause

a summons and complaint to be served upon a per-

son not a party to the action who is or may be liable

to him for all or part of the plaintiff’s claim against

he

Fed. R. Civ. P. 19(a):

‘‘Persons to be Joined if Feasible. A person

who is subject to service of process and whose

joinder will not deprive the court of jurisdiction over

the subject matter of the action shall be joined as a

party in the action if (1) in his absence complete re-

lief cannot be accorded among those already parties,

or (2) he claims an interest relating to the subject

of the action and is so situated that the disposition

of the action in his absence may (i) as a practical

matter impair or impede his ability to protect that

interest or (ii) leave any of the persons already

parties subject to a substantial risk of incurring

double, multiple, or otherwise inconsistent obliga-

tions by reason of his claimed interest. If he has

not been so joined, the court shall order that he be

made a party.”’

Statement

Background

The action below is one of several lawsuits arising from

five long-term contracts for supply of uranium and uranium

fuel assemblies entered into between UNC and each of four

utilities during the period 1967-1971 (the utility contracts).

In a series of agreements in 1971, UNC assigned those con-

tracts to petitioner’s predecessor Gulf United Nuclear

Fuels Covporation (‘‘GUNFC’’), a corporation formed by

Gulf Oil Corporation (‘‘Gulf’’) and UNC. On the occasion

of the assignments, UNC guaranteed GUNFC’s perform-

ance of all the utility contracts and UNC remained obli-

gated to the utilities on three of the five contracts to

supply the uranium required to perform those contracts.

UNC also entered into a Uranium Supply Agreement with

GUNFC which obligated UNC to supply to GUNFC the re-

quired uranium. In 1973, Gulf bought out UNC’s interest in

GUNFC. In connection with the buy-out the parties entered

into a revised Uranium Supply Agreement, providing that:

‘*UNC shall sell to the Corporation [GUNFC,

now General Atomic] and the Corporation shall pur-

chase from UNC all the Concentrates (including

those concentrates to be used in reload fuel assem-

blies to be fabricated by the Corporation) which the

Corporation is required to supply pursuant to the...

[utility contracts]. . .. The Concentrates ...

shall be provided in accordance with the terms and

conditions, including price, of the applicable [utility

contract], as required by the buyer and as speci-

fied in this Agreement.’’

Thereafter Gulf entered into a partnership with Scallop

Nuclear, Inc., whereby the two companies formed petitioner,

General Atomic Company. Gulf assigned its rights and ob-

ligations under the 1973 Uranium Supply Agreement and

the utility contracts to petitioner.

From 1967 to mid-1973, the market price of uranium re-

mained relatively stable at about $7 per pound, and the con-

tracts for the most part call for delivery of uranium at

about that price (subject to limited escalation). Since the

latter part of 1973, the market price of uranium has ad-

vanced dramatically, and is now some $40 per pound. The

difference between contract price and market price for the

uranium remaining to be delivered by UNC to petitioner

under the 1973 Uranium Supply Agreement is in excess of

$600,000,000.

The New Mexico State Court Action

Seeking to avoid continued performance of its obliga-

tion to supply uranium to GAC at the contract prices, UNC

stopped delivery in 1975 and commenced a declaratory judg-

ment action against petitioner and its constituent partners

individually in the District Court for the First Judicial Dis-

trict, County of Santa Fe, New Mexico, on August 8, 1975,

alleging among other things mutual mistake, breach and

commercial impracticability. After Gulf, which is of di-

verse citizenship to UNC, removed the entire case to the

United States District Court for the District of New Mexico

under 28 U.S.C. § 1441(¢c), UNC on December 31, 1975, took

a voluntary non-suit as of right pursuant to Fed. R. Civ. P.

41 (a) (1) (i). The same day UNC instituted the instant ac-

tion, which is virtually identical to the previous action ex-

cept that it names only petitioner as a defendant. Inas-

much as both UNC and Scallop Nuclear, the other partner

of petitioner, are Delaware corporations, petitioner was un-

able to remove.* UNC’s obvious purpose for this maneuver

was to keep the action in state court.**

a

* In its original complaint, UNC had also alleged fraud and

breach of fiduciary duty by Gulf in connection with the formation,

operation and dissolution of GUNFC and the procurement of a

release from UNC of its claims against Gulf in connection with Gulf’s

buy-out of UNC’s interest in G C in 1973. After UNC brought

the instant action without naming Gulf individually as a defendant,

Gulf filed an action on January 23, 1976, in the United States Dis-

trict Court in Albuquerque, New Mexico, for a declaratory judgment

that the release was valid.

** The desire of UNC, a substantial New Mexico employer, to

have its controversies with GAC and I&M resolved in courts within

the State is understandable. But that does not explain why UNC

took a non-suit and dropped a party in order to prevent removal to

the Federal District Court in New Mexico.

On May 18, 1976, after issuance of the alternative writ of pro-

hibition and shortly before oral argument before the New Mexico

Supreme Court on the permanent writ, it was reported that Justice

Donnan Stephenson of that Court intended to resign from the Court

10

The New York Federal Court Action

On February 24, 1976, Indiana & Michigan Electric

Company (‘‘I&M’’), one of the utilities with which UNC

had originally contracted for the supply of uranium and

uranium fuel assemblies, commenced an action against

petitioner in the United States District Court for the

Southern District of New York, seeking specific perform-

ance, damages and declaratory relief for petitioner’s al-

leged failure to make deliveries to I&M. I&M did not name

UNC as a defendant, although UNC remained liable on

its original contract with I&M, had guaranteed performance

thereof, was of diverse citizenship to UNC, and was clearly

subject to suit in that District.

Issuance of the Injunction

Shortly thereafter, on March 15, 1976, anticipating that

petitioner would implead it in the New York federal action

pursuant to Fed. R. Civ. P. 14(a),* UNC applied for and

as of June 30, 1976, to join the firm representing UNC. It was noted

that, while Justice Stephenson “had not committed himself to any

particular litigation”, the move would leave him “free to participate

in what could be the largest civil suit, money-wise, pending in the

world”. Albuquerque Journal, May 18, 1976, p. 1. Since his resig-

nation Mr. Stephenson has in fact taken an active role in the case.

* Petitioner had already indicated its desire to have the entire

controversy determined in a single forum by filing on January 19,

1976, a complaint in interpleader and in the nature of interpleader

pursuant to 28 U.S.C. § 1335 in the United States District Court in

Albuquerque, New Mexico. The complaint named as defendants

UNC, I&M and the three other utilities whose contracts with UNC

Were assigned to petitioner’s predecessor. Petitioner sought deter-

minations binding on all parties as to its respective rights and obliga-

tions under the 1973 Uranium Supply Agreement and the utility con-

tracts. On March 2, 1976, the Court granted the defendants’ motions

to dismiss the action on the ground that subject matter jurisdiction

under the interpleader statute was lacking. Petitioner’s appeal is now

pending in the United States Court of Appeals for the Tenth Circuit.

On September 9, 1976, in a further effort to find a federal forum

where both I&M and UNC are parties, GAC moved pursuant to Fed.

re net ee

11

obtained ex parte from the Santa Fe Court a temporary

restraining order restraining petitioner and its constituent

partners from ‘‘instituting suit or filing a third party com-

plaint against United Nuclear.’’* After hearing, the Santa

Fe Court on April 2, 1976, issued the Injunction.**

Petitioner promptly sought, and obtained on April 14,

1976, an alternative writ of prohibition from the New

Mexico Supreme Court prohibiting the trial court ‘‘from

taking any action to enforce ... [the Injunction] until the

further order of this Court’’. After briefing and argument,

the Supreme Court quashed the writ ‘‘as improvidently

granted’’.

Reasons for Granting the Writ

In square conflict with this Court’s holding in Donovan

v. Dallas, 377 U.S. 408 (1964), the state courts of New Mexi-

co have claimed the power to enjoin in personam federal

proceedings. By so doing, they have posed a direct chal-

R. Civ. P. 24 to intervene in an action brought in August 1975 by

UNC against I&M in a different New Mexico state court and there-

after removed by I&M to the federal District Court in Albuquerque.

UNC v. 1&M, Civil No. 75-561 (D.N. Mex.). This action has, since

April 1976, been indefinitely stayed pursuant to stipulation of those

arties while each has pursued in separate courts (in Santa Fe and

a York) its claims against GAC. Whether such intervention will

be permitted is not presently known. In any event, the Injunction

prevents GAC from asserting any claim against UNC in that action

as well.

* At the court’s suggestion UNC agreed that it should similarly

be enjoined.

** The Gulf declaratory judgment action, discussed in the foot-

note at p. 9, supra, and the interpleader action, discussed in the foot-

note at p. 10, supra, were exempted from the Injunction on the

ground that those actions were already pending when the Injunction

was sought. No such exemption was made for the New York fed-

eral court action initiated by I&M although it was also then pending.

12

lenge to federal supremacy and raised a question of the

gravest importance to the federal system.

The decisions of the New Mexico courts granting and

upholding the Injunction took place in the context of an

in personam action brought by a Delaware plaintiff in New

Mexico state court against non-New Mexico defendants,

and kept in the state court by the expedient of dropping

the non-Delaware defendant from the original action.

They took place in the context of an action just begun,

even before joinder of issue. The effect of the New Mexico

decisions has been to render petitioner helpless fully to

defend itself in a federal lawsuit in which it is an unwilling

defendant. In light of all the circumstances, it is clear

that the Injunction is nothing more nor less than a usurpa-

tion by the state courts of power specifically granted to the

federal courts by Congress and an unconstitutional abridge-

ment of a federal court defendant’s right to assert a com-

plete defense.

1. The Injunction Unconstitutionally Interferes With

The Federally Granted Rights of Petitioner As A Litigant

In An Ongoing Federal Proceeding. In Donovan, this

Court held that ‘‘state courts are completely without power

to restrain federal-court proceedings in in personam actions

like the one here’’. 377 U.S. at 413. As shown in Point 2,

infra, we believe that this principle renders the Injunction

unconstitutional in its entirety as it applies to in personam

federal court actions. The Injunction’s most outrageous

aspect, however, lies in its interference with an ongoing

federal court action. In Donovan this Court held that

state courts were without power to require a plaintiff to

abandon a suit in personam brought in federal court where

there is concurrent jurisdiction, even after a final state

court judgment. A fortiori, then, state courts are without

13

power to circumscribe the claims or defenses which a defen-

dant can assert in federal court before the state court case

has even been tried. Unfortunately, however, the New

Mexico state courts have failed to conform to this clear

constitutional limitation. By this Injunction the New

Mexico state courts have arrogated to themselves the power

to limit petitioner’s federal rights, as a defendant in the

previously pending New York federal action, to invoke

the full range of remedies that Congress and this Court,

through the Federal Rules of Civil Procedure, have author-

ized every federal litigant to utilize in the prosecution or

defense of its case.

There can be no question of petitioner’s right, absent

the Injunction, to implead UNC as a person ‘‘who is or may

be liable to [petitioner] for all or part of the plaintiff’s

claim against him”’ in that action. Such impleader would,

as intended by Fed. R. Civ. P. 14(a), afford petitioner the

opportunity, if it is ordered to deliver uranium to 1&M

or to pay damages to I&M, to obtain in the same case a

judgment against UNC compelling UNC to deliver such

uranium to it or to indemnify it for the damages assessed.

In addition, there are basic common, indeed identical,

questions underlying petitioner’s disputes with UNC and

with I&M. The 1973 Uranium Supply Agreement incor-

porates much of the UNC-I&M 1967 contract by reference

and, at least according to UNC (in its pleadings below),°

conditions UNC’s obligation to deliver uranium to peti-

tioner on petitioner’s legal obligation to deliver to I&M

under such contract. UNC has raised a host of alleged

defenses to delivery under that contract, both in the action

below and in litigation directly with I&M.** Indeed, UNC

* Complaint in UNC v. GAC, pp. 18-19, 22-23.

** UNC v. I&M, Civil No. 75-561 (D.N. Mex.).

14

has asserted that it need not deliver to petitioner because

petitioner need not deliver to I&M. Without UNC joined

in the I&M action, the federal court might find that peti-

tioner is obligated to deliver uranium to I&M, while the

New Mexico state court, viewing identical contract pro-

visions and other questions differently, could find that

UNC is not obligated to deliver to petitioner, on the ground

that petitioner is not obligated to deliver to I&M. Such a

risk of inconsistent adjudications concerning identical is-

sues highlights the prejudice to petitioner resulting from

the Injunction.

The Injunction, and petitioner’s consequent inability to

join or implead UNC in the federal action,* operates to

frustrate the intent of the Federal Rules to prevent incon-

sistent adjudication on issues common both to the claim of

the utilities against petitioner and to petitioner’s claims

over against UNC. It deprives petitioner of its ultimate

defensive position, that if it is found liable, UNC must be li-

able over to it. Additionally, it deprives petitioner of im-

portant practical benefits to which it is entitled under the

Federal Rules. For example, the Injunction deprives peti-

tioner of the broader discovery rights available against

parties to an action (e.g., Fed.R.Civ.P. 26, 33, 34, 35, 37). It

may well deprive petitioner of the oral testimony of UNC

at the trial since, if UNC is not a party, its witnesses be-

yond subpoena range may perceive no reason to comply

with GAC’s request that they testify.

The right of a defendant under the Federal Rules to

assert claims against a third party by impleader or cross

*On September 9, 1976, the court in the New York federal

court action denied petitioner’s motion pursuant to Fed. R. Civ. P.

19(b) requesting that I&M’s claims against petitioner be dismissed

because the Injunction prevented petitioner from impleading or

seeking joinder of UNC pursuant to Fed. R. Civ. P. 14(a) or 19(a).

15

claim is unquestionably an important one. As Professor

Moore has stated:

‘‘The general purpose of Rule 14 is to avoid two

actions which should be tried together to save the

time and cost of a reduplication of evidence, to ob-

tain consistent results from identical or similar evi-

dence ; and to do away with the serious handicap to a

defendant of a time difference between a judgment

against him, and a judgment in his favor against the

third-party defendant.’’ 3 Moore, Federal Practice

7 14.04, at 501 (1964).

The importance attached to the rights embodied in Rule 14

is illustrated by the fact that, in order fully to effectuate

the broad remedial purposes of the rule, the federal courts

have held that there need not be diversity of citizenship be-

tween the defendant and third party defendant and that

venue requirements need not be satisfied as between them.

E.g., Stemler v. Burke, 344 F.2d 393 (6th Cir. 1965) ; Agra-

shell, Inc. v. Bernard Sirotta Co., 344 F.2d 583 (2d Cir.

1965). To require petitioner to attempt to defend itself in

federal court without the full range of protection afforded

by federal law is, we submit, patently unconscionable; it is

clearly not a result within the power of a state court to

bring about.*

In short, this Injunction, which prevents any federal

court from making a decision binding all parties affected by

a given contractual provision, is an affront not only to

* Compare the reaction of another ee soe which,

recognizing the strong judicial interest in fair expeditious resolu-

tion of controversies in forums where all relevant parties can be

joi not only reversed an injunction similar to that issued below,

deferred to the courts in a forum where all of the ies could

be joined. Csohan v. United Benefit Life Ins. Co., 33 Ohio

App.2d 425, 200 N.E.2d 345 (Ohio Ct. App. 1964).

16

those federal supremacy considerations recognized by this

Court in Donovan but also to judicial economy and

efficiency.

2. The Injunction Unconstitutionally Inhibits Petition-

er’s Access to Federal Courts Generally. We had thought

it clear, at least since Donovan, that state courts were

utterly without power to enjoin a party’s recourse to fed-

eral court in an in personam action, and that the extent to

which a party’s right to proceed in federal court was

affected by a pending state court proceeding was a question

within the exclusive power of the federal courts to decide.

The astonishing contrary result reached below, we submit,

mandates summary reversal by this Court.

The New Mexico Supreme Court, in upholding the In-

junction, did not deem it necessary to state its reasons. The

nearest it came to dealing with this Court’s holding in

Donovan was a comment from the bench that ‘‘the composi-

tion of the Court has changed’’ since Donovan was decided.

Appendix E, p. 10a. In its briefs and arguments, UNC at-

tempted to distinguish Donovan on the ground that it

barred only state court interference with federal court ac-

tions already instituted against the party seeking the in-

junction and did not bar injunctions prohibiting filing fu-

ture federal actions or injunctions prohibiting joinder of a

new party in an on-going federal action. We submit that

this reading of Donovan is entirely unwarranted either by

the facts of that case or by the language of its holding.

In Donovan, a plaintiff class sought an injunction against

construction of an airport runway and issuance of muni-

cipal bonds for that purpose. After entry of an adverse

judgment and exhaustion of appeal in Texas State courts,

many of the named plaintiffs, together with a group of new

plaintiffs, filed a federal action raising issues substantially

—

— ee

17

identical to those in the terminated state action and seeking

similar relief. This action had the effect of continuing the

standstill caused by the state action, because under Texas

State law the bonds could not issue while litigation chal-

lenging their validity was pending.

The City of Dallas moved to dismiss the federal action.

It also applied to the Texas Court of Civil Appeals for an

injunction against further prosecution of the federal action.

That court refused the city’s application, holding that it

was without power to enjoin litigants from prosecuting

an action in a federal court. City of Dallas v. Brown, 362

S.W.2d 372 (1962). On application for a writ of man-

damus, the Texas Supreme Court held: (a) that the Court

of Civil Appeals should issue the requested injunction and

(b) that that court, if it concluded ‘‘that other suits to

relitigate the same issues may be filed by other members

of the class bound by the [state court] judgment’’, was

empowered to ‘‘enjoin the filing of such suits by other

members of the class’’. City of Dallas v. Dixon, 365

S.W.2d 919, 927 (1963). The Court of Civil Appeals

then issued an injunction prohibiting all members of

the class from further prosecution of the pending fed-

eral action and enjoining them from institution of ‘‘any

further litigation, lawsuits or actions in any court, the

purpose of which is to contest the validity of the airport

revenue bonds’’. Following issuance of the injunction,

the federal court granted the City’s motion to dismiss.

The plaintiffs in that case appealed, and certain of those

plaintiffs filed a second action in federal court seeking to

enjoin the Supreme Court of Texas from enforcing the

previously issued injunction. Thereafter the Texas Court

of Civil Appeals found each of the federal court plaintiffs

in contempt of the injunction by virtue of either having

18

continued to prosecute the first federal action or having

filed the second federal action. City of Dallas v. Brown,

368 S.W.2d 240 (Tex. Civ. App. 1963). The contempt cita-

tions directed to 26 of the federal court plaintiffs, including

Donovan, were based solely on the fact that they had

instituted the second federal court action after the Injunc-

tion had been issued (Record at p. 251).

This Court reversed, holding that the Texas courts were

without power to restrain the federal court proceedings:

‘‘While Conzress had seen fit to authorize courts

of the United States to restrain state-court proceed-

ings in some special circumstances, it has in no way

relaxed the old and well established judicially de-

clared rule that state courts are completely without

power to restrain federal-court proceedings in in

personam actions like the one here.’’ 377 U.S. at

412-13.

Based on that holding, this Court vacated the judgments

of contempt and remanded them for reconsideration in light

of the holding that the order on which they rested was

invalid.*

Nowhere in its opinion did this Court state, or even

suggest, that the Texas Supreme Court order directing

issuance of the injunction was invalid only in so far as it

prohibited continued prosecution of existing federal ac-

tions. The order in fact prohibited the commencement of

new actions as well as the prosecution of old, and it was

held invalid in its entirety. The commencement of the sec-

ond federal action was cited as a separate and independently

sufficient ground for the judgment of contempt; as to 26 of

* On remand, the judgments of contempt were vacated. City of

Dallas v. Brown, 384 S.W. 2d 724 (1964).

19

the respondents, the citation was based solely on their

having instituted the second action; and the judgment was

vacated in its entirety as having ‘‘rested on the mistaken

belief that the writ prohibiting litigation by the federal

plaintiffs was ‘valid’ 377 U.S. at 412.

The decisions below are also in conflict with the reading

given Donovan by other state and federal courts. Circuit

courts of appeals, ruling on the propriety of a dismissal of

a federal district suit, have relied on Donovan to hold that a

federal court must keep open its door despite the pendency

of a state suit filed before the federal action. Carr v. Grace,

516 F.2d 502, 503 (5th Cir. 1975) ; Miller v. Miller, 423 F.2d

145, 146 (10th Cir. 1970). In Bekoff v. Clinton, 344 F. Supp.

642 (S.D.N.Y. 1972) and Weisfeld v. Spartans Industries,

Inc., 58 F.R.D. 570 (S.D.N.Y. 1972), Donovan was relied on

in holding that state court injunctions against subsequent

institution of federal proceedings were invalid. State au-

thorities to the same effect include Johnson v. Brown-Ser-

vice Ins. Vo., 293 Ala. 552, 307 So.2d 518 (1974) and Crawley

v. Bauchens, 13 Ill. App.3d 791, 300 N.E.2d 603 (1973), aff’d,

57 I1l.2d 360, 312 N.E.2d 236 (1974).

Donovan does not stand alone, but is illustrative of

the principle, long embedded in American constitutional

jurisprudence, that the states are without power to curtail

the jurisdiction of the federal courts in in personam actions.

That principle is firmly grounded in Article III and Article

VI of the Constitution. Thus, this Court has held that a

state may not limit to state courts the enforcement of a

right created by a state statute. Chicago and N.W.R. Co.

v. Whitton’s Adm’r, 80 U.S. 270 (1871). Similarly, a

state’s waiver of sovereign immunity for governmental

units within the state may not be limited to suit in state

courts. Chicot County v. Sherwood, 148 U.S. 529 (1893). Nor

20

may a state require out of state corporations to agree not

to remove actions to federal court as a condition of doing

business in the state. Home Ins. Co. v. Morse, 87 U.S. 445

(1874). The prohibition against state court injunctions of

federal in personam proceedings did not originate with Don-

ovan, but is, as the Donovan court noted, an ‘‘old and well-

established judicially declared rule’’. 377 U.S. at 412-13.

See, e.g. the cases cited by the Court at page 413 n.11. It

has thus been the consistent view of this Court that federal

court jurisdiction is a matter of federal law to be decided

by the federal courts, and is not a matter within the pro-

vince either of the state legislatures or of the state courts.*

* The Santa Fe Court was of the view that “The institution or

prosecution of other legal proceedings . . . would be vexatious and

harassing”. That finding rested on its view that “the parties to this

suit should have their rights, duties and liabilities determined by this

Court”, that “determination of this lawsuit may fully resolve the

disputes between the parties”, and that, consequently, further litiga-

tion would be “multiplicitous”. (Appendix A, pp. 1a-2a; Appendix

B, p. Sa). Such conclusions (with which we emphatically disagree)

are simply irrelevant under Donovan, which presented a far more

sympathetic case for such a point of view. e plaintiffs there had

prosecuted their case in the state court to a final judgment, and they

had lost. Their only apparent motive for commencing the federal

action was to inake it impossible for the defendant to reap the fruits

of its state court victory, since the mere pendency of that action, and

the ensuing appeals, would operate to prevent issuance of the bonds.

In all events, the federal courts are certainly as capable as state

courts in dealing with vexatious and harassing litigation.

21

Conclusion

Unwarranted interference by state courts with federal

proceedings creates questions of paramount importance

which require consideration by this Court. It should be

made clear that such basic notions of federal supremacy

as those embodied in Donovan are not to be disregarded

because ‘‘the composition of the Court has changed”’.

For the reasons stated, the petition should be granted.

Respectfully submitted,

Joun R. Hupres,

W. Dzwwi1s Cross,

One Chase Manhattan Plaza,

New York, N. Y. 10005

Joun D. Ross,

20 First Plaza,

Albuquerque, New Mexico 87103

Danret K. Mavens,

Rosert B. McCaw,

1666 K Street, N.W.,

Washington, D. C. 20006

Attorneys for Petitioner

Of Counsel:

CravatH, Swaine & Moons,

One Chase Manhattan Plaza

New York, N. Y. 10005

Ropey, Dickason, Sioan, Axin & Ross,

20 First Plaza, ;

Albuquerque, New Mexico 87103

Wuoer, Cutuzr & PIcKERING,

1666 K Street, N.W.,

Washington, D. C. 20006

September 14, 1976

XA

la

Preliminary Injunction

IN THE DISTRICT COURT

OF THE FIRST JUDICIAL DISTRICT

Strate or New Mexico, County or Santa Fz

No. 50827

—

Vw

Unrrep Nuciear Corporation,

a Delaware corporation,

Plaintiff,

v.

Genera Atomic Company, a partnership composed of

Guur Om Corporation and ScatLop Nuc.ezag, Inc.,

Defendants.

— ‘

“

The above entitled cause having come on before the

Court on plaintiff’s application for a preliminary injunction

prohibiting General Atomic Company or its partners,

privies, agents, servants and employees from instituting or

prosecuting any action or actions in any other forum, and

notice having been given as provided by law, and the Court

having considered all pleadings, affidavits, documentary evi-

dence, briefs and argument of counsel, Finns:

1. This Court’s jurisdiction over the parties and subject

matter of this action attached prior to the institution of

any proceedings in any other forum involving the subject

matter of this action.

2. In the interest of orderly procedure, the parties to

this suit should have their rights, duties and liabilities de-

termined by this Court.

3. A determination of this lawsuit may fully resolve the

disputes between the parties, thus obviating any need for

further litigation concerning the subject matter of this suit.

2a

Preliminary Injunction

4. Plaintiff will be irreparably injured should the in-

junction prayed for not be granted in that defendant has ad-

mitted that unless restrained it will seek to file additional

actions against plaintiff and plaintiff will have no adequate

remedy at law in that the harm sought to be avoided by this

injunction will have occurred.

5. The institution or prosecution of other legal proceed-

ings by any of the parties to this action, or their privies,

would be vexatious and harassing and would be multi-

plicitous litigation, all of which is contrary to the speedy

and orderly administration of justice.

6. The inconvenience, amount of litigation, and expense

which would be suffered by the parties if other proceedings

are instituted or prosecuted will be reduced or eliminated

if a preliminary injunction is granted.

7. There is currently pending in the United States Dis-

trict Court for the District of New Mexico a case entitled

Gulf Oil Corporation v. United Nuclear Corporation, Civil

No. 76-032-B. There is also currently pending before the

United States Court of Appeals for the Tenth Circuit an

appeal entitled General Atomic Co. v. Duke Power Com-

pany, et al., No. 76-1152.

8. No bond or security need be given by United Nuclear

Corporation as this injunction merely maintains the status

quo between the parties and this preliminary injunction will

benefit both parties in that the inconvenience and expense

of multiplicitous litigation will be reduced or eliminated.

And the Court Conc.upgs as matters of law that:

A. This Court has jurisdiction over the subject

matter of this action and the parties hereto.

B. This Court has the authority to issue a pre-

liminary injunction as requested by plaintiff and

should do so, except, however, that this injunction

eS

3a

Preliminary Injunction

shall not operate so as to forbid Gulf Oil Corporation

from prosecuting the case entitled Gulf Oil Corpora-

tion v. United Nuclear Corporation, Civil Cause No.

76-032-B in the United States District Court for the

District of New Mexico, a cause pending at the time

application for this preliminary injunction was made,

and the prosecution of that appeal to the Tenth Cir-

cuit Court of Appeals entitled General Atomic Co.

v. Duke Power Company, et al., No. 76-1152.

Ir Is THEREFORE OnpERED that General Atomic Company,

its partners, privies, agents, servants and employees, are

hereby preliminarily enjoined and prohibited from filing

or prosecuting any other action or actions against United

Nuclear Corporation in any other forum relating to any

rights, claims or the subject matter of this action. “his

injunction prohibits the institution or prosecution of ordin-

ary litigation, third party proceedings, cross-claims, arbi-

tration proceedings or any other method or manner of

instituting cr prosecuting actions, claims or demands relat-

ing to the subject matter of this lawsuit, or including United

Nuclear Corporation as a party thereto. However, the

case of Gulf Oil Corporation v. United Nuclear Corporation,

Civil Cause No. 76-032-B, currently pending in the United

States District Court for the District of New Mexico, is ex-

cepted from the operation of this preliminary injunction, as

is the appeal currently pending before the Tenth Circuit

Court of Appeals in General Atomic Co. v. Duke Power

Company, et. al., No. 76-1152. The injunction herein against

defendant shall bind Plaintiff to the same terms.

Submitted : Epwin L. Ferrer

Harry L. Bicser District Judge

One of Pitfs. Attys.

Wru1aMm Feperici

One of the Defendant’s

Attorneys.

4a

Opinion of Felter, D.J.

STATE OF NEW MEXICO

First Jupiciua, District

March 29, 1976

BiGBEE, CaRPENTER & CrouT

-Attorneys at Law

P. O. Box 669

Santa Fe, New Mexico 87501

MopraL1, Speruine, Rorx., Harris & Sisk

Attorneys at Law

P. O. Box 2168

Albuquerque, New Mexico 87103

MonTooMERY, F'eperici, ANDREWS, Hannaus & BUELL

Attorneys at Law

P. O. Box 2307

Santa Fe, New Mexico 87501

Re: Unrrep Nucuear Corp. v. Generat Atomic Co.

Santa Fe County #50827

Dear Sirs:

Consideration has been given to the pleadings, affidavits,

testimony, briefs and arguments of counsel in the above-

entitled and numbered case. Three issues are now before

the Court for decision, namely:

1. Respondents’ Motion to Dismiss for want of in per-

sonam jurisdiction over respondent.

2. Respondents’ Motion to Dismiss for failure to join

indispensable parties.

3. Plaintiff’s application for a preliminary injunction.

5a

Opinion of Felter, D.J.

I am of the opinion that this Court has in personam

jurisdiction over respondents herein and that no defect in

jurisdiction or otherwise exists by reason of any failure to

join indispensable parties. Therefore, respondents motion

to dismiss for lack of in personam jurisdiction and their

motion to dismiss for failure to join indispensable parties

are both denied.

Both parties made strong and convincing arguments of

their respective positions upon plaintiff’s application for a

preliminary injunction. Either way the Court should rule

on this issue would result in some inconvenience and ex-

pense to the losing party. I am satisfied that the Court has

the authority to grant such a preliminary injunction except

insofar as are concerned federal cases where the jurisdic-

tion of the Court has already attached.

In the interest of orderly procedure, it occurs to me that

the parties to this lawsuit should have their rights, duties

and liabilities determined in this forum upon the merits of

this case at the earliest possible date. Conceivably, such a

determination could obviate in other forums, other litiga-

tion connected with the subject matter of this lawsuit. I

believe that the sum total of inconvenience, litigation and

expense, without analyzing which party to the greater ex-

tent may be affected thereby, can be ameliorated or reduced

by the granting of the preliminary injunction. I believe that

the ends of justice will be served better by the granting of

the preliminary injunction than would be the case if it were

refused. I am confident that once this case is decided on its

merits, irrespective of which party prevails, that any re-

maining rights, duties or liabilities between the parties and

those of any other interested parties can be and will be set-

tled or litigated appropriately.

Accordingly, respondents will be enjoined preliminarily,

from filing or prosecuting any other action or actions

- 6a

Opinion of Felter, D.J.

against plaintiff in any other forum, relating to any of the

rights, claims or subject matter of this lawsuit. The pre-

liminary injunction shall include ordinary litigation, third

party proceedings, arbitration proceedings and any and all

other methods of prosecuting actions, claims, demands, ete.

Jurisdiction of the District Court of the United States for

the District of New Mexico already has attached in an ac-

tion wherein Gulf Oil Corporation is plaintiff and United

Nuclear Corporation is defendant. That case is excepted

from the operation of the preliminary injunction hereby

granted as required by Donovan v. City of Dallas, 377 U.S.

408, 84 S. Ct. 1579 (1964) rehearing denied 85 S. Ct. 14.

Counsel for plaintiff should submit to the Court for sig-

nature and filing an appropriate order consistent with the

Court’s ruling. Respondents may have twenty days from

the date of entry of such order within which to plead to the

merits or file such responsive pleadings as may be proper.

Very truly yours,

Epwin L. Fevrer

District Judge

ELF/ama

APPENDIX C

7a

Alternative Writ

IN THE SUPREME COURT

Or THe State or New Mexico

—_

——-

GeneraL Atomic Company, a partnership composed of

Gulf Oil Corporation and Scallop Nuclear, Inc.,

Petitioner,

Tue Honoraste Epwin L. Feurer, District Court Judge

for the First Judicial District, Santa Fe County, New

Mexico,

Respondent.

To:

Hon. Epwin L. Fevrer

Judge of the District Court

Santa Fe, New Mexico

and

Unrrep Nucigear Corporation,

real party in interest

Greetings:

Wuenreas, a verified petition having been filed in the

above entitled cause by Petitioner General Atomic Com-

pany, and good cause appearing for the issuance of an

alternative writ, and a copy of the petition for said alter-

native writ being attached hereto as Exhibit ‘‘A’’;

8a

Alternative Writ

Now, THEREFORE, you, the Respondent, Hon. Edwin L.

Felter, Judge of the District Court of Santa Fe County,

are hereby prohibited and restrained from taking any ac-

tion to enforce the preliminary injunction entered April 2,

1976 in District Court Cause No. 50827 entitled United

Nuclear Corporation v. General Atomic Company, Santa

Fe County Cause No. 50827, until the further order of this

Court; and to show cause by the filing of a response to said

writ on or before the 26th day of April, 1976, why you

should not be so prohibited and restrained and further to

show cause why this alternative writ herein issued should

not be made permanent.

Petitioner’s Brief shall be filed on or before the 7th

day of May, 1976; Respondent’s Brief shall be filed on or

before the 19th day of May, 1976; and oral argument will

be had on the matter on the 9th day of June, 1976, at the

hour of 9:00 o’clock, A.M., in the Supreme Court Hearing

Room, Supreme Court Building, Santa Fe, New Mexico.

Wirness, The Honorable LaFel E. Oman, Chief Justice

of the Supreme Court of the State of New Mexico, and the

seal of said Court this 14th day of April, 1976.

Rose Marre ALDERETE

Clerk of the Supreme Court

of the State of New Mezico

[Sea]

APPENDIX D

9a

Order of The Supreme Court of New Mexico

IN THE SUPREME COURT

Or tue Strate or New Mexico

Wednesday, June 16, 1976

No. 10870

tt,

Ww

GeneraL Atomic Company, a partnership composed of Gulf

Oil Corporation and Scallop Nuclear, Inc.,

Petitioner,

v8.

Hon. Epwin L. Fexrer, District Court Judge for the First

Judicial District, Santa Fe County, New Mexico,

Respondent.

sy

Ww

This matter coming on for consideration by the Court

upon petition for alternative writ of prohibition or alterna-

tive writ of superintending control, and the Court having

issued said Writ and having heard oral argument and now

being sufficiently advised in the premises ;

Now, Txererore, It is Onperep by the Court that the

alternative writ heretofore issued in the above entitled

cause on the 14th day of April, 1976, be and the same is

hereby quashed as having been improvidently issued.

Attest: A true Copy

Rose Marre ALDERETE

Clerk of the Supreme Court

of the State of New Mexico

APPENDIX E

10a

Excerpts from tape recording of hearing on June 16,

1976 in Santa Fe, New Mexico before the Supreme

Court of the State of New Mexico, Justice Oman,

Justice Montoya and Justice Sosa sitting for the court.

Mr. Eastham: If it please the Court, Mr. Robb will,

after I conclude my simple point, get into the various issues

in the various cases. My simple point is one that stands

alone. It does not depend on the facts. It docs not depend

on what other cases are or are not filed around the country.

It is a point that is completely controlled by the 1964 deci-

sion of the United States Supreme Court in Donovan v.

Dallas and the attempted distinction of Donovan by oppos-

ing counsel simply does not hold up under analysis.

Donovan makes it clear beyond dispute that Judge Felter

acted beyond his jurisdiction when he purported to enjoin

General Atomic and its privies from taking any action in

Federal Court—any action in Federal Court. Donovan is

basically founded in the United States Constitution, Articles

III and Article VI, Article III, of course, being the judicial

power article which sets it up in the Supreme Court and

such inferior courts as Congress may from time to time

ordain and establish and states that the judicial power shall

extend to all cases in law and equity, between citizens of

different states and a bunch of other things. And then,

of course, in Article VI we have the supremacy clause that

states that the Constitution and the laws of the United

States which shall be made in pursuance thereof shall be

the supreme law of the land and the judges in every state

shall be bound thereby, anything in the constitution or laws

of any state to the contrary notwithstanding.

Justice Sosa: Mr. Eastham, even that case, though,

had a vigorous dissent in it and the composition of the

court has changed, has it not?

Mr. Eastham: Yes, it’s a 6 to 3 decision that has stood

on the books since 1964 without any serious attack of any

kind that I have seen, and I certainly believe that it’s the

law—

lla

Excerpts from tape recording of hearing on June 16,

1976 in Santa Fe, New Mexico before the Supreme

Court of the State of New Mexico, Justice Oman,

Justice Montoya and Justice Sosa sitting for the Court.

Justice Sosa: Well, did the Donovan case—the Dono

van case did not mention as Judge Felter’s Order did,

vexatious and contentious litigation as apparently this—.

Mr. Eastham: Well, it didn’t in one sense, Mr. Justice

Sosa. It did certainly by implication because the whole

basis of the dissent was—gosh, you guys, you six guys that

are in the majority are ruling that you can bring vexatious

cases, harassing cases, anything else you want in Federal

Court. And I think by that dissent pointing that out I

think it is made quite clear that the majority who obviously

reads the dissent knew exactly what they were doing, they

were saying that there was a right to bring federal actions

be they vexatious, harassing, any other kind. The only

exception that the Court spelled out was the in rem excep-

tion saying that once a Court gets jurisdiction of a res,

whether it’s a state or a federal court, that court has exclu-

sive jurisdiction thereafter.

Justice Montoya: Except that the facts in the Donovan

ease and the facts in this case are quite dissimilar in the

way the thing arose.

Mr. Kastham: Yes, Donovan is certainly a much more

vexatious type of situation than ours. As you probably

know from looking at it, Donovan on behalf of a bunch of

people in Dallas brought suit in State Court, a class action

to stop some airport bonds. He lost all the way through

state court including denial of certiorari. Then he starts

again; he starts in federal court, and he after bringing that

case which had the practical effect of stopping the issuance

of the bonds, the city goes in to get an injunction against

him in state court.

12a

Excerpts from tape recording of hearing on June 16,

1976 in Santa Fe, New Mezico before the Supreme

Court of the State of New Mezico, Justice Oman,

Justice Montoya and Justice Sosa sitting for the Court.

Justice Montoya: No, the Texas Supreme Court took it

upon itself to order the Court of Appeals to—

Mr. Eastham: Right, I’m trying to go through the

chronology. He first went into the Texas Court of Civil

Appeals which ruled that they had no power to issue such

an injunction. Then he took—then the city took a separate

action in the Texas Supreme Court. The Texas Supreme

Court in March of 1963 ordered, in effect, the Court of

Appeals, saying if you don’t issue a writ of prohibition,

by golly, we will.

Justice Montoya: We'll order you to issue it, right.

Mr. Eastham: So the Court of Appeals being a very

obedient court as Court of Appeals should be, proceeded on

the 16th—I think these times are now crucial—on the 16th

of April the Texas Court of Civil Appeals issued the writ

prohibiting basically two things—they prohibited the plain-

tiffs and Mr. Donovan from carrying on any further in the

pending federal court case and they further prohibited and

enjoined Mr. Donovan and the plaintiffs from instituting

any other litigation, lawsuits, or any actions relating in any

way to the runway and the airport revenue bonds. Seven

days later—seven days later on April 23, Mr. Donovan for

the first time naming himself as a plaintiff joined by a

number of the other plaintiffs in the federal action, brought

a new suit—this was a new suit—in the United States Dis-

trict Court against the Texas Supreme Court and the Texas

Court of Civil Appeals to restrain enforcement of this writ

that was issued April 16. On May 22, 1963 the Texas Court

of Civil Appeals, pursuant to motion filed by the City,

entered a contempt judgment, fined the individual plaintiffs

13a

Excerpts from tape recording of hearing on June 16,

1976 in Santa Fe, New Mezico before the Supreme

Court of the State of New Mexico, Justice Oman,

Justice Montoya and Justice Sosa sitting for the Court.

including, I might add, some plaintiffs who had joined the

second federal court action—the new post-injunction federal

court action after it had been filed and had never been a

plaintiff in any other action. Those persons were fined and

Mr. Donovan was given twenty days in jail which he

served. And it is shown in the records of the Supreme

Court the sentence for Mr. Donovan and the fines for a

number of the other persons was based solely on the fact

that they filed the new action in Federal Court, not based

on continuing with the pending action but they were fined

and jailed based solely on the new federal action. Now this

chronology in the Donovan case I’ve given you is to show

exactly what the facts were because they are important and

the chronology is important. Now Mr. Justice Black in

speaking for the majority six justices outlined the true

issue and I’m skipping the first sentence of Donovan which

I will come to later but he towards the end of the case said

the true issue was the propriety of a state court’s punish-

ment of a federal court litigant for pursuing his rights,

pursuing his rights, to federal court remedies, and the

court concluded that right—this is the right to pursue

federal court remedies—was granted by Congress and can-

not be taken away by the state. The Texas courts were with-

out power—that’s the phrase the court used—without power

to take away the federal right by contempt proceedings or

otherwise. Thus it’s clear from looking at the facts and the

language of the court that the court based its decision not

on some principle of comity that the federal court proceed-

ings should be allowed to continue once begun, but rather

on the much more basic rationale that the right of a person

to litigate in federal court cannot be taken away by the

l4a

Excerpts from tape recording of hearing on June 16,

1976 in Santa Fe, New Mexico before the Supreme

Court of the State of New Mexico, Justice Oman,

Justice Montoya and Justice Sosa sitting for the Court.

states. The right to litigate can’t be taken away, and

obviously the right to commence a federal action in a federal

court is a federal right to the same extent as the right to

continue or complete such a pending action. Now the

ingenious argument of opposing counsel before the lower

court to the effect that the Donovan case applies only to

pending cases apparently had its genesis in a presumption

made by an author in 42 Am. Jur. 2d, § 236 which was

quoted on page 4 of United’s brief. This unknown author

stated with regard to the Donovan rule:

‘*Presumably the foregoing rule is limited to

instances in which an action is actually pending in

the federal court at the time the injunction is

sought.’’

Interestingly, the only federal authority cited by this

author was Princess Lida v. Thompson, the case decided in

1939 cited in the Donovan case, cited by the majority, the

one holding that the in rem jurisdiction becomes exclusive

in the first court that gets ahold of the res. So it doesn’t

support this presumption. And the only other authorities

were three old state court decisions ranging in time from

1925 to 1950, all well before Donovan so how he arrives at

this presumption based on those authorities is beyond us;

and we have found no authorities since Donovan indicating

that it applies only to pending cases and the reason is quite

obvious—it can’t because it did apply to a non-pending

ease, the contempt was issued for a non-pending case.

Donovan included both sides of the coin—both the pending

case and continuing in it—some people were punished for

15a

Excerpts from tape recording of hearing on June 16,

1976 in Santa Fe, New Mezico before the Supreme

Court of the State of New Mexico, Justice Oman,

Justice Montoya and Justice Sosa sitting for the Court.

that; and the filing of a new case, and some people were

punished for that. And as I stated the—some of the persons

held in contempt were held in contempt solely for bringing

this new federal action. Now, opposing counsel attempts

to get some aid and comfort from the language of Justice

Black in the beginning of the Donovan opinion which talks

about the question presented is whether a state court can

validly enjoin a person from prosecuting an action in per-

sonam in a district or appellate court of the United States

and so forth; making great point that the word ‘‘prosecu-

tion’? somehow implies continuing something that already

exists. Again, this is done without benefit of authority, this

reading of the word ‘‘prosecution’’ as meaning something

like continuing. In our reply brief we have set out authori-

ties, including the United States Supreme Court, the

Seventh Cireuit, Black’s Law Dictionary and Webster’s

Third New International—that’s the latest great biggy—

showing that the word ‘‘prosecution’’ includes commenc-

ing, conducting, carrying on and coneluding. It doesn’t

mean carrying on solely. It includes the beginning, the

middle and the end. We submit that this ruling of Donovan

‘s clear. A state court cannot enjoin a person from bringing

or conducting or concluding an in personam federal court

iction. The injunction issued by Judge Felter did exactly

this. Accordingly, the writ of prohibition should be made

permanent insofar as the injunction purports to prevent

General Atomic and all the other persons and entities

enjoined in that order from taking action of any kind in

federal court. As I stated, my point does not depend on the

facts. It goes to a whole question of power. Now Mr. Robb

will go into the other aspects of this matter. Thank you.

l6a

Excerpts from tape recording of hearing on June 16,

1976 in Santa Fe, New Mezico before the Supreme

Court of the State of New Mexico, Justice Oman,

Justice Montoya and Justice Sosa sitting for the Court.

Mr. Bigbee: .. . O.K., here we’ve got Donovan and what

does it say. The question here is whether a State Court can

validly enjoin a person from prosecuting an action in per-

sonam and at this time Mr. Eastham says and so forth and

s6 forth but I’ll read the rest of the sentence, in a District

or Appellate Court of the United States which has jurisdic-

tion both of the parties and of the subject matter.—

Justice Oman: Let me ask you a question on that Gulf

suit. I understand that is pending on your motion to dis-

miss.

6 es *

Mr. Bigbee: Now here’s our lawsuit and here’s what

the case which has jurisdiction both of the parties them-

selves. Yes, I’ve looked in Black’s Dictionary. You don’t

prosecute anybody in vacuum. You’ve got to first file some-

thing. If the District Attorney decides to prosecute some-

body, he’s first got to get an indictmert or a criminal com-

plaint, then you go on, but that is not what’s involved in

Donovan. It says ‘‘further prosecute’’ and now I’m going

to state the Donovan case real succinctly and I believe cor-

rectly. There’s been a bunch of Love Field people and they

had filed a suit in the Texas court and they had lost their

lawsuit and there was a final judgment in it after appeal

applying up to the Supreme Court of the United States. It

was over. Period! Then they turned around and filed an-

other suit after going through Texas all the way up to the

Supreme,—the Texas Court of Civil Appeals—Supreme

Court of Texas—Supreme Court of the United States.

They filed a second suit in the Federal Court where

it is claimed the matter is res judicata and just the

statement at the bottom of the opinion the city filed a

17a :

Excerpts from tape recording of hearing on June 16,

1976 in Santa Fe, New Mezico before the Supreme

Court of the State of New Mezico, Justice Oman,

Justice Montoya and Justice Sosa sitting for the Court.

motion to dismiss and an answer to the complaint in

Iederal Court. This is the second case, but the State case

‘is over. But at the same time the city applied to the Texas

Court of Civil Appeals for a writ of prohibition which was

denied. The Supreme Court of Texas says, issue it. Now

Texas Court of Civil Appeals’ decision is interesting

cause they hit the question right on the nose. They said

the issue here is not vexatious and multiplicitous litigation

cause there’s only one case. It isn’t simultaneous multi-

plicity of actions. The Texas case is over. There is nothing

else to be done. The filing of a second case doesn’t inter-

fere with that action. The judgment’s there. And they

said the question is who determines the res judicata effect

of the first judgment. That’s what the Texas Court of Civil

Appeals says and the Supreme Court of the United States

said they hit it pretty close and the Texas Court of Appeals

said this: If the res judicata effect is to be determined by

the court, first court having the controversy, then it would

he not only the determining factor as to whether it was res

judicata but it could never be submitted any place else.

Now they had res judicata effect. The Supreme Court of

the United States and the Texas Court of Civil Appeals says

it should be determined by the first court that’s there, on

that question of res judicata. The second suit’s file. O.K.,

complete answer, it was sustained is, it is res judicata. It

was good, but that was up to the Federal Court and was

an obligation of full faith and credit to determine. You are

not having two or three lawsuits going at once. Now, the

Supreme Court of Texas erroneously tells Mr. Donovan

that he is to dismiss the federal suit; in other words the

federal, the Supreme Court of Texas, has taken it upon

itself to make the determination whether the issues in the

18a

Excerpts from tape recording of hearing on June 16,

1976 in Santa Fe, New Mexico before the Supreme

Court of the State of New Mexico, Justice Oman,

Justice Montoya and Justice Sosa sitting for the Court.

Texas court are identical to those of the Federal Court and

res judicata should apply. Mr. Donovan doesn’t do it. He

shows his objections to dismissal and the second case filed

there did not involve the merits of Love Field; it was just

like when he refused to consent to the dismissal of the

federal action. He was violating this erroneous order. He

also filed a second suit in the federal court to prohibit the

Supreme Court of Texas from keeping him from litigating

the res judicata effect in the federal court. It didn’t raise

the issues of bondage, but he wasn’t complying with that

order. Now we have a very different situation. There was

no ‘‘if’’? in Love Field case in the original Donovan case.

Let’s assume that those plaintiffs had filed, first a suit in

State Court and they were trying it. Then they sue, filed

another case in Federal Court involving the same issues.

And then maybe another Federal Court District or another

state or two where you have multiplicitous, simultaneous

litigation. That was not presented. The very question of

the minority opinion was they would have applied the

rule of multiplicitous, vexatious litigation to successive

actions. That is not our situation. What we’re objecting

to is simultaneous multiplicity and vexation. We filed our

suit, we applied for TRO’s, were turned down. They filed

two suits, never just one. Two. Then we find out they

want to join us in the Southern District of New York;

they filed another one in North Carolina. They didn’t

quite hear—I don’t if it’s fully developed in the pleadings

here—or both—they filed a lawsuit there and they’ve

alleged we weren’t joined on account of this order. They

want to suc us all over the United States. Now they got

their two bites of the apple. We filed our lawsuit and they

19a

Excerpts from tape recording of hearing on June 16,

1976 in Santa Fe, New Mexico before the Supreme

Court of the State of New Mexico, Justice Oman,

Justice Montoya and Justice Sosa sitting for the Court.

properly filed the case in Albuquerque, both of them. It’s

up to that couri—inierpleader would take precedence if

it’s reversed. 1 don’t think there’s interpleader jurisdic-

tion. Those cases—in the Gulf case it’s a matter of comity

which court should continue in exercise and that will be

submitted to Judge Bratton. We’re not asking this court

to tell Judge Bratton what he should do on that case. The

Donovan rule, I think, may prohibit it. There are two real

good cases. One following and one before the Donovan

ease. Poole v. Mississippi Publishers case which is there—

the Poole case which is in our index. it puts a whole lot of

eases together. The second case is that 600 California case,

just a Federal District Court opinion, but they pull all the

intervening decisions together on what I’ll call multiplicity

simultaneous actions involving the same subject matter

rather than successive actions filing one suit after another

suit where the only issue is which court has jurisdiction to

determine the res judicata effect. The first court or the

second court where that issue is pending. The Supreme

Court of the United States says res judicata is to be deter-

mined by the case, by the court where the second suit is

filed, and I don’t know of anybody in New Mexico who’s

ever tried to do it differently . . .

Mr. Bigbee: .. . So we think Jude Felter properly ex-

ercised his discretion; he had jurisdiction under the Dono-

van case; he had jurisdiction under the general weight of

authority, and he exercised that jurisdiction and he had the

power because we are not yet a party and jurisdiction has

not yet attached against us in New York or North Carolina,

which is the test of Donovan, I thank you very much.

20a

Eacerpts from tape recording of hearing on June 16,

1976 in Santa Fe, New Mezico before the Supreme

Court of the State of New Meaico, Justice Oman,

Justice Montoya and Justice Sosa sitting for the Court.

Mr. Eastham: Just a couple of quick comments about

Donovan, first Mr. Bigbee read the language of the question

relating to can it validly enjoin a person from prosecuting

an action in personam in a district or appellate court of the

United States which has jurisdiction, both of the parties and

the subject matter. That jurisdiction obviously refers to

whether they have the right to take this matter, whether

it’s then pending or in the future, has to mean that because,

in fact, one of the actions involved in Donovan was an action

which took place after the injunction. So that jurisdiction

is a general jurisdictional clause; it didn’t say, Black didn’t

say which has taken jurisdiction both of the parties and the

subject matter but which has jurisdiction. That is an en-

tirely different meaning. Secondly, and I think I answered

this when a question was asked, I think, by Mr. Justice Sosa

about the majority opinion on saying anything about vexa-

tion. That is true but the dissent and—there’s three differ-

ent places and at the end they say, ‘‘In any event, the statu-

tory boundaries of federal jurisdiction are hardly to be

regarded as a license to conduct litigation in the federal

courts for the purpose of harassment.’’ They were saying

that in dissent—they lost.

Justice Sosa: My question was this: They said that you

could not be enjoined from seeking redress in the federal

courts if there was a Congressional—given authority by

authorization of Congress, but my question again is in this

particular case there are two cases that are presently pend-

ing in Federal Court already involving the same issues and

the same subject matter that you have not been enjoined on

and my question was—did you read into Donovan the fact

21a

Excerpts from tape recording of hearing on June 16,

1976 in Santa Fe, New Mezico before the Supreme

Court of the State of New Mezico, Justice Oman,

Justice Montoya and Justice Sosa sitting for the Court.

that they said that that type of vexatious litigation could

never be enjoined.

Mr. Eastham: That what’s I read—

Justice Sosa: That’s what you read into it.

Mr. Eastham: And Stewart, from in his dissent, in an

earlier place says the power of a court of equity to enjoin

persons subject to its jurisdiction from conducting vexa-

tious and harassing litigation in another forum has not been

doubted until now; in other words he’s saying that that’s

the effect of the federal court action and I think the answer

to it is, and I understand how this would disturb a judge,

the answer is that the federal courts certainly have power

to stay, to hold in abeyance any action. In other words, if

the federal courts feel that there has been some vexation or

harassment they can take care of the problems. It’s not as

though it’s a remediless situation. Finally, Mr. Bigbee

mentions the one post-Donovan case that he apparently is

relying on—500 California Corporation versus Hargine;

it didn’t relate to Donovan—had nothing to do with Dono-

van; it was a case where a federal court issued an injunction

against a state court action and that is a different thing.

It’s pursuant to a statute of the United States and relates

to what federal courts can do as to the states. Donovan

relates as to what the states can do with federal and I think

it’s quite clear.